Asa, iba, nacva dlom feb 1, 2012

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IBA, ASA, NACVA 22nd BV Conference …

IBA, ASA, NACVA 22nd BV Conference
Minneapolis, MN
February 1, 2012

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  • 1. Discounts for Lack of Marketability By Michael GregoryMichael Gregory Consulting LLC ©
  • 2. Michael Gregory• 28 years at IRS as engineer valuer, manager, operations team lead, controller, acting assistant director, territory manager• Championed IRS DLOM Job Aide 2009• Opened Michael Gregory Consulting LLC September 2011• mg@mikegreg.com 651-633-5311• ASA, CVA, MBA, Qualified Neutral©February 1, 2012 Michael Gregory Consulting LLC © 2
  • 3. Disclaimer The opinions presented here are those of Michael Gregory. Michael Gregory does not represent the IRS. Any opinions presented in this seminar are those of the author and do not represent an official position of their current or previous employers. This material is offered for educational purposes only. The author and his employer expressly disclaim any liability, including incidental or consequential damages, arising from the use of this material or any errors or omissions that may be contained in it.February 1, 2012 Michael Gregory Consulting LLC © 3
  • 4. DiscountsFebruary 1, 2012 Michael Gregory Consulting LLC © 4
  • 5. Background and Today’s Presentation• IRS Job Aide on Discount for Lack of Marketability at irs.gov Originally Prepared 9/2009 for IRS Valuers• August 2011 Developments• The Job Aide Public and Private• Comments on the Job Aide• Comments Since Entering Private Practice Regarding DLOM’sFebruary 1, 2012 Michael Gregory Consulting LLC © 5
  • 6. August 2011 Develops• Retirement July 31, 2011• Call from Eva Lang and Jim Hitchner• Call from the IRS• Research• IRS Officially Publishes Job Aide August 22nd at 4:01 PM• Webinar August 23rd with Jim Hitchner and Jim AlerdingFebruary 1, 2012 Michael Gregory Consulting LLC © 6
  • 7. Follow Up After Webinar• Webinar Published• Other Follow Up Webinars – Lance Hall September 8, 2011 FMV Opinions Rebuts Job Aide – Chris Mercer September 15, 2011 QMDM• ASA BV Conference in Chicago October 10-12, 2011– DLOM Commentary – Espen Robak, John Finnerty, Ashok AbbottFebruary 1, 2012 Michael Gregory Consulting LLC © 7
  • 8. Job Aide on DLOM at irs.gov• Download It• Read It• Key Points – When – What – Why• How It May Be UsefulFebruary 1, 2012 Michael Gregory Consulting LLC © 8
  • 9. IRS Job Aide Key Points• Length 111 to 116 Pages Depending on Source• Prepared and Reviewed by 5 ASA’s, 8 AVA/CVA’s and 3 CPA’s• IRS View on DLOM’s as of 2009• Identifies 33 Factors Deemed Important *• Includes 17 Initial IDR Items *• Includes How IRS Valuers Should Approach Issue As a Reviewer* Suggest Include In Your ReportFebruary 1, 2012 Michael Gregory Consulting LLC © 9
  • 10. IRS Job Aide Key Points Continued• Includes How IRS Valuers Should Approach Issue As a Valuer• Provides Sample Report Language *• Detailed Strengths and Weaknesses of Most Common Approaches *• Addresses Concerns with Fair Market Value Opinions Statistical Analysis• Provides Detailed Commentary on Other Methods* Suggest Include In Your ReportFebruary 1, 2012 Michael Gregory Consulting LLC © 10
  • 11. Some Feedback From Three Webinars• 900 Participants• Key Points From the Webinars – What Do You Rely Upon for DLOM? – How Long Do You Spend on DLOM? – How Useful and Will the Job Aide Change How You Approach DLOM’s? – Will DLOM Change Approach and Will It Make You Spend More Time DLOM’s in the Future?February 1, 2012 Michael Gregory Consulting LLC © 11
  • 12. Job Aide Comments• Executive Summary – Background – Objective – Approach – Conclusion• Introduction• Organization• Other Authors’ ObservationsFebruary 1, 2012 Michael Gregory Consulting LLC © 12
  • 13. Life In New VentureFebruary 1, 2012 Michael Gregory Consulting LLC © 13
  • 14. Observations Since Joining the Public Sector• Sources: BV Wire, NACVA Ambassador Quick Read and Valuation Examiner, ASA BV Conference in Chicago, Networking with Valuers and Their Clients• John Finnerty Asian Option Model Big 4• Pluris Espen Robak Secondary Markets• Valuation Advisors Largest Data Base and Int’l• Ashok Abbott Liquidity Analysis from Public MarketsFebruary 1, 2012 Michael Gregory Consulting LLC © 14
  • 15. Observations Since Joining the Public Sector Continued• John Paglia Pepperdine Private Capital Markets – Revenue Successful Loans – $1 - $5 Mil 44% – $5 - $25 Mil 72% – >$25 Mil 90%• Question – Where Does Your Client Obtain Funds and Where Is FMV Source for Funds?February 1, 2012 Michael Gregory Consulting LLC © 15
  • 16. Observations• IRS Job Aide on DLOM’s Worth Reading• Look at Why It Was Written and Audience• Nothing Personal – Strictly Analytic• Multiple Approaches Recommended – Use Judgment and Document Rationale• Courts More Analytically Oriented• See Pro’s and Con’s of Methods and Choose AccordinglyFebruary 1, 2012 Michael Gregory Consulting LLC © 16
  • 17. QuestionsFebruary 1, 2012 Michael Gregory Consulting LLC © 17